Starting January 6, 2024, employees across the UK will see a reduction in their Class 1 National Insurance contributions, with the main rate dropping from 12% to 10%. This move, announced during the Autumn Statement 2023, is expected to positively impact around 29 million individuals in the upcoming tax year.
The focus of this adjustment is on employed individuals earning above the Class 1 Primary Threshold of £12,570. There are similar changes affecting the self-employed.
The expected outcome for an average employee earning £35,400 is a tax cut of over £450 in the coming tax year.
This decrease in National Insurance contributions is hoped to have a positive ripple effect on the financial situations of many working families. With a lighter tax burden, employees may find themselves with more disposable income for various purposes, contributing to improved overall financial stability.
This adjustment aligns with the government’s efforts to enhance the financial situation of working families and is part of its broader strategy to support economic well-being without fuelling inflation.
We’re pleased to inform you that PGS has already updated our software to reflect this change. Employers’ National Insurance remains unchanged. Importantly, no action is required from agencies or contractors; the transition is seamless.
In summary, the reduction in Class 1 National Insurance contributions signifies a first small step towards improving the financial circumstances of employees. This change, coupled with the commitment to keep Employers’ National Insurance unchanged, aims to provide relief for working families while maintaining fiscal balance. As always, People Group Services is committed to keeping you informed and ensuring a smooth transition with our updated software.
